We caught up with one of the SaaStr community’s favorite speakers, Dharmesh Shah, CTO and co-founder of Hubspot, on lessons learned launching a second product.  HubSpot had recently expanded its Sales products and the learnings were top of mind.

The A+ session is above, but a few top learnings:

Expanding Your Product-Line: Overcoming Your Own Success

1) Most startups, in order to go into “scale-up” mode will need a second product, a “second act”.

The SaaS companies crossing $1b ARR all seem to have a second product.  Outside of B2C, you probably need one.  But — a second product, done right, means your customers are worth so much more.  As the years go by, your customers can buy so much more from you.  And then when they leave to join another company?  They can bring you in there too, and start the cycle again.

2) Often, startups are a victim of their own success. If they were successful with “Act 1”, that’s what the world knows them as. In HubSpot’s case, we started as a marketing software company — so that’s what the world knew us as.  

Hubspot launched Sales CRM as a Free product, which might have been a partial mistake.  But it allowed existing Marketing customers to quickly test the Sales product.  20% of their customers were using Salesforce, 20% another CRM — and a full 60% no traditional sales CRM.  So that was the initial insertion point, the 60% — competing with spreadsheets.  Or even, nothing.

Hubspot really already was a CRM — but a CRM for the marketing team.  Connecting that to the CRM for the sales team for one unifying customer and contact database was the vision and something that could move the needle.

3) It has now been 5+ years since we expanded into the CRM/sales software place and we’re still dealing with market perception issues.

Brands are even more powerful in SaaS than we ever thought — but they can also box you in a bit.  Even 5 years into their Sales CRM, Hubspot still has to educate the market about other products besides the core Marketing product(s).  The brand is so highly aligned to inbound marketing from the first decade.

4) What’s “material” in a second product?  Breadth (Twilio) vs Depth (Veeva)

Sales is the #1 focus, as integrating the marketing and sales CRM’s dramatically enhances the value of Hubspot.

5) Suites vs. best-of-breed … or is it really just multiple products?

The suite does seem to be back.  Buyers want to buy from trusted vendors, all things being equal.  If a second product from a trusted vendor is strong, you can avoid so more cognitive overload from learning a new UI, new security processes, new systems, etc.  And minimize the costs of training.

6) How do partners think about additional products?  HubSpot is 40%+ through channel

Educating your own sales force on how to sell 2 products at the same time is hard enough.  Educating your channel and partners?  A lot harder.

A classic related post on how the CEOs of Twilio and Veeva made similar decisions here:

When Should You Add a Second Product? Answers from the CEOs of Twilio, Veeva, Amplitude, HubSpot, Gainsight and More

And if you enjoy Dharmesh’s insight, take a look back at one of his classic SaaStr Annual sessions here on the top mistakes they made at Hubspot in the earlier days.  It’s great:

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